Dear All,
I am working with a manufacturing company in gurgaon. Till now we have been calculating EL on Gross salary, but now our directors are saying us to calculate EL on Basic. Kindly help me in this.

From India, Delhi
Statutory Complaince/labour & Employment
Hr Manager
Deputy Manager - Hr, Ir And Admin
Raj Kumar Hansdah
Shrm, Od, Hrd, Pms
Consultant & G.m.
Sr. Hr Manager
Hr Executive
Hrm, Ir & Adminstration
+2 Others


EL shall be applicable on gross salary, there is always reasoning and rational on basis on any law. suppose if the employee is comming to office he shall get the complete slary including all allowance viz HRA, Conveyance, Medical etc. and if he on leave then whether he will not pay HRA or other allowance. it should be on gross slary instead of Basic.

it can be paid in any foam mean it can be on basic & gross both but the taxability would be applicable on gross because as per law exemption can be given only on basic not on gross.
From India, New Delhi

Dear Harry,
It is a matter of confussion. But EL is long time calculated in basic. Why?. Here is the facts.
Basic >= Minimum wages per day * Total No of days present. i.e if M.W is 170 then basic per month is 4420.
So all other allowances that you give him is actually helping him to come to this company for working. Eg: HRA, In order for him to come and work in a n organisation, he needs to have shelter. So you pay him for his shelter. So its an added money you give him to come and work. Only basic wages is the salary that you give for his work done.
So if an employee is on leave then he has not worked. So you automatically cut his allowance to. So whay pay him his house rent if he didn'e come for work. Hope I was not arrogant towards the employees side.
Yashwanth R
SKY technologies

From India, Bangalore
Gurgaon HR

Dear Harry,
Calculation of leave encashment is always on basic salary because other components are supporting to Basic Salary , So no need to pay other supportive components.
Agree with Mr. Yashwanth,
Chill HR

From India, Gurgaon

let take that I am on leave for four days & apply for El for these 4 days leaves. here I will get entire four day of leave which I believe will be equal to my four days of gross salary(FULL SALARY) not basic. my point is when it comes to enchantments your are telling me to do on Basic but for purpose of leave I take it as full day salary. This is wat I am not been able to understand.
From India, Delhi
Gurgaon HR

Dear Harry,
What i suggested you in my last post is the same what the practice maximum organisations are following.
While working period if one need EL then means full day salary, not basic.
But leave encashment is entirely depend upon the company to company.
Case 1 : If the company policy says that company will deduct / pay notice period on basic the leave encashment must be on basic salary.
Case 2 : If notice period deduction / Payment will be on Gross Salary then leave encashment must be on Gross salary only.
Policy of leave encahsment is totally based upon the notice period, and that must be well defined at the very beginning with the office policy, not at the time of encashing leaves and searching the way out.
Chill HR !!

From India, Gurgaon

Dear Harry, Good Morning...!!! All leaves are always calculated on Basic + DA, not on Gross Salary... Leave Encashment = Basic + DA /30 X No. of Leaves. It includes SL, PL & CL. Regards, Vani M HR
From India, Bangalore
Gurgaon HR

Dear Vani,
Are you sure that "It Includes SL, PL & CL"??
Only EL or we can say PL (Earned Leaves or Privilege Leave) will encash not CL (Casual Leaves) and SL (Sick Leave) if i am not mistaken.
Chill HR !!

From India, Gurgaon

There had been repeated posts on this subject.Detailed discussions have taken place in this forum on this subject
However I am repeating certain points as it has come up for discussion once again
1. When an employee is availing leave whether it is earned leave or casual leave or sick leave, his full salary is given. If an employee 's basic salary is Rs 1000 and this other allowances are Rs 1000, then he gets Basic plus other allowances full when he or she avail leave with pay
2. When an employee gets encashment of leave,then generally Basic plus DA is given The argument here is that when an employee avails encashment his HRA and other allowances are already given in terms of salary. The logical argument is there is no need to pay the same amount twice.

From India, Chennai

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